Bill Gross: Treasurys Advance This Week for Wrong Reason

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said Treasurys gained this week for the wrong reason.

U.S. government securities rose on speculation economic growth will slow as the Federal Reserve cuts its efforts to support growth, Gross said. Several policy makers said the Fed should be ready to vary the pace of its $85 billion in monthly bond purchases, according to minutes of the central bank’s Jan. 29-30 meeting released this week.

“The Treasury market has caught a bid based upon that potential expectation,” Gross said late Thursday in New York on Bloomberg Television’s “Street Smart” with Trish Regan and Adam Johnson. “I sort of think otherwise. Yields, certainly in the mortgage market, and the Treasury market might go up as well.”

U.S. 10-year rates were little changed Thursday at 1.98 percent as of 9:23 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2 percent security due in February 2023 was 100 6/32.

Treasurys returned 0.1 percent this week as of Thursday, or 8.9 percent at an annual rate, according to Bank of America Merrill Lynch indexes.

The central bank buys bonds to pump money into the economy, and it will probably stick to the policy through 2013, Gross, who is based in Newport Beach, California, said.

The $285.6 billion Pimco Total Return Fund has handed investors a 7.5 percent gain in the past year, ranking in the 93rd percentile among its peers, according to data compiled by Bloomberg. Pimco is a unit of Munich-based insurer Allianz SE.